2012 November 23 Friday
Why San Bernardino Went Bankrupt: Public Employee Unions

A long and very excellent Reuters analysis of the San Bernardino city bankruptcy is worth reading in full. The analysis outlines the forces of corruption and irresponsibility that drove San Bernardino and numerous other California cities to drive up wages and retirement benefits to city workers (especially police and fire) to unsustainable level. Curiously a state-level agency, the California Public Employee Retirement System, encouraged the cities to irresponsibly expand retirement benefits. Fat city for police.

In bankrupt San Bernardino, a third of the city's 210,000 people live below the poverty line, making it the poorest city of its size in California. But a police lieutenant can retire in his 50s and take home $230,000 in one-time payouts on his last day, before settling in with a guaranteed $128,000-a-year pension. Forty-six retired city employees receive over $100,000 a year in pensions.

Three quarters of the city budget goes to their police and fire departments. The article names some other California cities at risk of bankruptcy.

Lest you think this is just a California problem, the article says Illinois and Kentucky are in the worst shape.

Fat city for fire fighters.

The average salary for a full-time San Bernardino firefighter in 1997 was $75,610, adjusted for inflation into 2010 dollars. By 2010, it was nearly $147,000, according to a Reuters analysis of Census Bureau data.

We need to ban public employee unions, at least at the local level. They become more powerful than the voters and are quite effective at misleading the voters.

Share |      By Randall Parker at 2012 November 23 07:34 PM 

bbartlog said at November 24, 2012 5:49 PM:

The real question is whether these pensions will ultimately be paid by the Fed. Illinois has already been floating the idea of a federal bailout for their bankrupt pension fund. If there is no such bailout, these pension funds will ultimately go bankrupt. If the federal government (using Fed money) *does* bail out these states, it will be a frightful example of regressive looting - people with six figure guaranteed incomes getting bailed out by the net victims of currency inflation.

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